A Pacific Warning

Australia prepares for U.S. decline.

Updated May 8, 2009 12:01 am ET

Since World War II, U.S. military dominance has underpinned the Asia-Pacific region's prosperity and relative peace. So it's cause for concern when one of America's closest allies sees that power ebbing amid unstable nuclear regimes such as Pakistan and North Korea and the expanding military power of China.

In the preface to a sweeping defense review released Saturday, Australian Defense Minister Joel Fitzgibbon writes: "The biggest changes to our outlook . . . have been the rise of China, the emergence of India and the beginning of the end of the so-called unipolar moment; the almost two-decade-long period in which the pre-eminence of our principal ally, the United States, was without question."

Australia isn't forecasting the end of U.S. dominance soon; the report predicts that will continue through 2030. There are also a few bright spots, such as a stronger India and the emergence of Indonesia as a stable democratic ally.

But without sustained U.S. defense spending and focus on the Asia-Pacific, it's unclear which nation will ultimately dominate the region -- and that could have profound effects on security and trade. The clearest challenge comes from China, which the Pentagon estimates spent $105 billion to $150 billion in 2008 bulking up its forces. Australia also worries about instability among its Pacific island neighbors, terrorism, the proliferation of weapons of mass destruction and emerging threats like cyber war.

In response to this outlook, Canberra is retooling its defense. It is doubling the size of its submarine fleet to 12 from six and buying about 100 Joint Strike Fighters, three destroyers and eight frigates. The ships and subs will be equipped with cruise missiles. It will also upgrade its army and special forces units and look for new ways to cooperate with the U.S. and other regional democratic powers.

Prime Minister Kevin Rudd said Saturday: "Some have argued that in the global economic recession we should reduce defense spending to ease the pressure on the budget. But the government believes the opposite to be true. In a period of global instability Australia must invest in a strong, capable and well resourced defense force."

Australia currently spends around $13.1 billion a year on defense, not counting money for new equipment. The new policy paper says spending will increase by 3% annually until 2018, which isn't much. But the importance of Canberra's message is about priorities. Australia is worried about the end of the "unipolar moment." Americans and Asians should be worried too.

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